Wal-Mart Says ‘Looking’ at Support of Minimum Wage Raise

By Renee Dudley -
Feb 19, 2014

Wal-Mart Stores Inc. (WMT), the largest private employer in the U.S., said it’s looking at supporting an increase in the federal minimum wage, breaking with business and industry groups that oppose such a measure.

Wal-Mart is weighing the impact of additional payroll costs against possibly attracting more consumer dollars to its stores, David Tovar, a company spokesman, said today in a telephone interview. Increasing the minimum wage means that some of the 140 million people who shop at the chain weekly would “now have additional income,” Tovar said.

In the mid-2000s, Wal-Mart backed an increase in the federal minimum wage that eventually took effect in 2007. Asked whether Wal-Mart would support another raise in the federal minimum wage, Tovar said: “That’s something we’re looking at. Whenever there’s debates, it’s not like we look once and make a decision. We look a few times from other angles.”

President Barack Obama and Senate Democrats want to raise the federal minimum wage to $10.10 an hour from $7.25 an hour, saying that doing so would boost the economy and help bridge the gap in income equality. Most Republican lawmakers oppose any such measure, dubbing it a potential job killer. So does the National Retail Federation, an industry trade group of which Wal-Mart is a member. Wal-Mart’s current position on the issue is neutral, Tovar said.

No Position

“We have not taken a position on the various proposals and we remain neutral on minimum wage increase legislation, provided that the proposals are not discriminatory (i.e. targeted only to certain employers) and that increases are phased in gradually,” he said in an e-mailed statement.

Today, the Congressional Budget Office released a report saying that while raising the minimum wage could wipe out as many as 500,000 jobs, it also could boost the incomes of 16.5 million low-wage workers in an average week. Wal-Mart hasn’t conclusively determined the impact on its business of raising the minimum wage, Tovar said.

“You’re trying to predict future consumer behavior,” he said. Would increased consumer spending “offset and maybe even exceed whatever impact you pay out to associates? It’s really hard to model behavior based on these kinds of changes.”

Tovar compared the internal analysis to the company’s deliberations over last year’s cuts to the federal Supplemental Nutrition Assistance Program, also known as food stamps. In October, Wal-Mart predicted the cuts could boost sales as shoppers increasingly would turn to the retailer with the reputation of having the lowest prices. Last month, Wal-Mart said that turned out not to be the case.

Chamber Opposition

Along with the NRF, the Chamber of Commerce has opposed an increase in the federal minimum wage. The other primary retail industry group, the Retail Industry Leaders Association, has taken no stance on the minimum wage debate.

Asked to comment on the NRF’s opposition, Tovar said: “There’s plenty of occasions where we don’t necessarily agree. But it makes a decision based on where a majority of their members are. Those circumstances arise, and this one of them.”

Gap Inc. announced today that it will raise its hourly pay for U.S. employees to $9 in 2014 and $10 the following year, saying it wants to “do more than sell clothes.”

The increased pay will benefit about 65,000 store employees, the San Francisco-based company said in a statement. Chief Executive Officer Glenn Murphy announced the plan during an employee conference call this morning.

“To us, this is not a political issue,” Murphy said in a statement on the Gap website. “Our decision to invest in front-line employees will directly support our business, and is one that we expect to deliver a return many times over.”

Playing Field

Wal-Mart opposed a 2013 bill in the District of Columbia that would have raised the minimum wage for retailers with individual stores of 75,000 square feet or larger and that have companywide annual sales of $1 billion or more.

“If it’s a level playing field for all employers, and we and everyone else can compete on equal footing, then we’re OK with whatever legislation is decided for that particular jurisdiction,” Tovar said.

He declined to say how much the proposed federal increase would cost the Bentonville, Arkansas-based company, saying that the information is competitive. The company has 1.3 million U.S. employees, and about 4,000 of them currently make either a state or federal minimum wage, Tovar said.

Senate Majority Leader Harry Reid, a Nevada Democrat, plans to bring a minimum wage increase proposal to the Senate floor in March. Wal-Mart has disclosed lobbying on the federal bill, the Fair Minimum Wage Act (S. 460), since late last year.

“We want to be part of the conversation because of our size as the country’s largest private employer,” Tovar said. “We get a lot of questions on it from people in D.C.”

Tovar said that “business leaders are looking for certainty. They want to know what the rules are so they can manage their business accordingly.”